Equinox and Calibre Combine to Create Canadian Giant

As of the end of July 2025, Equinox Gold Corporation (EQX) has a market capitalization of approximately $6.4 billion, making it one of the more prominent mid-cap gold mining companies. This is the third mid-cap gold miner I have analyzed this month, following Eldorado Gold (NYSE:EGO) and Alamos Gold (NYSE:AGI).

Headquartered in Canada, Equinox Gold operates a diverse portfolio of assets primarily in North and South America, with a growing presence in Latin America. Equinox Gold shares similarities with Eldorado Gold and Alamos Gold, focusing on mining-friendly jurisdictions and committing to growth through disciplined capital deployment. In terms of production over the past 12 months, Equinox produced 655,458 gold ounces, which is slightly higher than the other two miners indicated above.

Equinox Gold is known for its aggressive expansion strategy, having made several significant acquisitions in recent years, including the integration of the Aurizona and Castle Mountain mines. The company has made a significant advancement by acquiring Calibre Mining on June 17, 2025. This acquisition adds two high-quality Canadian mines to Equinox’s portfolio: the Greenstone Mine in Ontario, which has recently commenced commercial production with 44,449 gold ounces in 1Q25, and the Valentine Gold Mine in Newfoundland, which is set to pour its first gold later this year.

Together, these mines have the potential to produce nearly 600,000 ounces of gold annually. This new addition could bring Equinox’s total production close to one million ounces by 2025, with the potential to exceed 1.2 million ounces as operations expand. This move is a major step toward establishing Equinox Gold as a leading gold producer in the Americas. However, while this growth-oriented approach offers exciting potential for investors, it also introduces a level of operational complexity and risks that should be carefully assessed before making a long-term investment in EQX. The production of 1Q25 originated from eight different mines.

Despite being the highest first quarter in the company’s history, with 145,290 gold ounces, gold production in 1Q25 has been noticeably lower than the two preceding quarters, as illustrated in the graph below:

Equinox Gold is facing issues as it ramps up operations at the Greenstone Mine (equipment issues, lower-than-expected grades, and recovery problems have already led to a cut in 2025 production forecasts). Integrating Calibre’s mines, particularly the new Valentine project, presents a challenge for the team, as they must manage complex logistics across Canada, the United States, Brazil, and Nicaragua. Balancing these technical issues while ensuring cost control, environmental compliance, and maintaining a stable workforce will be challenging. However, successfully navigating this situation is crucial for Equinox’s future.

Several factors contribute to Equinox Gold’s All-In Sustaining Cost (AISC), which has risen to a record high of $2,065 per ounce in 1Q25 (see chart below). Notably, cost overruns in Brazil and the temporary suspension of operations at Los Filos have led to unrecovered fixed costs. Conversely, the price of gold received in 1Q25 was a record of $2,858 per ounce, which helped mitigate the negative effects in the first quarter. This trend is expected to continue in 2Q25, with the gold price likely to reach above $3,250 per ounce.

In April 2025, operations at Equinox Gold’s Los Filos mine were suspended due to the expiration of a land access agreement with the Carrizalillo community. While the company had agreements in place with two other local communities, Carrizalillo withheld its consent due to unresolved issues, including a lack of transparency regarding contractor income. This situation led to protests and a breakdown in negotiations. Consequently, Los Filos was removed from the 2025 production guidance and reclassified as a development-stage project. The suspension has delayed expansion plans and significantly reduced the mine’s output potential for the year. Unless these issues are resolved soon, this suspension could jeopardize Equinox’s broader production targets and diminish the strategic value of its operations in Mexico.

For the reasons mentioned above, Equinox Gold appears to be riskier than both Eldorado and Alamos. It also has weaker free cash flow and does not pay a dividend, in contrast to Alamos, which has strong financials and stable operations. Alamos Gold is currently paying a very small dividend that may be increased in the future.

While Equinox may seem to be trading at a discount, its short-term outlook remains uncertain, and the second quarter of 2025 will be crucial for understanding how Equinox is adapting. Therefore, Eldorado and Alamos provide more stability, better technical momentum, and slightly lower geopolitical risks, making them a safer option for gold-focused investors.

Equinox Gold has aggressively expanded over the past five years, transforming into a major gold producer with a focus on the Americas. Key milestones include the 2020 Leagold merger, which significantly increased production capacity, and the 2021 Premier Gold acquisition, which secured a stake in Canada’s Greenstone Project. The 2024 consolidation of Greenstone ownership and the 2025 merger with Calibre Mining further solidify Equinox’s position as a top-tier producer, with nine operating mines and major growth assets, such as Valentine. These moves reflect a clear strategy: build scale, focus on stable jurisdictions, and increase long-term value through operational control and a robust project pipeline.

Equinox Gold primarily operates as a gold mining company, with gold sales accounting for approximately 97% of its total revenue in the first quarter of 2025. The company began 2025 with strong operational and financial results, reporting solid gold production for the first quarter despite a sharp decline from the fourth quarter of 2024. It produced 145,290 ounces of gold in 1Q25, marking its highest output ever for a first quarter. This achievement was driven by a continued ramp-up at Greenstone, despite some challenges, and steady contributions from its core operations across the Americas.

Equinox Gold reported a strong revenue performance, driven by record gold prices, but faced significant challenges to profitability due to operational disruptions. The company achieved a new first-quarter production record by producing 145,290 ounces of gold, primarily due to the ongoing ramp-up at its Greenstone project and consistent output from its portfolio across the Americas.

Thanks to a substantial 38% increase in realized gold prices, reaching $2,858 per ounce (see chart above), along with a 27% growth in ounces sold (147,290 ounces), Equinox achieved an impressive 76% year-over-year increase in revenue but down 26.3% quarter over quarter, totaling $423.7 million in 1Q25 as shown in the chart below.

This top-line strength highlights Equinox’s core identity as a pure-play gold producer and demonstrates its ability to capitalize on favorable market conditions.

Despite experiencing impressive revenue growth, the company reported a net loss of $75.5 million, which is an increase from the $42.8 million loss reported the previous year. This substantial decline in profitability was primarily due to a $28.6 million inventory write-down, as well as $9.9 million in care and maintenance expenses resulting from the suspension of operations at the Los Filos mine, which I previously discussed.

The one-time charges, along with increased cash costs and higher sustaining costs, which averaged $1,769 per ounce for cash costs and a significant $2,065 per ounce for all-in sustaining costs (AISC), are putting pressure on profitability. When excluding the Los Filos operations, costs showed improvement but remained above last year’s levels. This reflects ongoing inflationary pressures and operational challenges, particularly during the ramp-up at the Greenstone mine.

On a positive note, income from mine operations rose to $33.7 million, more than doubling the $11.4 million reported in 1Q24. This increase was largely driven by Greenstone’s growing contribution of $24.4 million. The company also reported a modest EBITDA of $81.04 million and experienced a deficit of $39.2 million in free cash flow, due to a low operational cash flow of $54.49 million.

Equinox’s balance sheet remains moderately leveraged, with $178.26 million in cash, cash equivalents, and marketable securities. The net debt was approximately $1.215 billion as of March 31, 2025.

This financial position highlights the significance of the recent merger with Calibre Mining, which was completed on June 17, 2025. Calibre shareholders received 0.35 Equinox Gold shares for each Calibre share, reflecting a 10% premium over Calibre’s pre-announcement trading price.

The completion of the Calibre acquisition marks a significant milestone for Equinox Gold, strengthening its position as a larger and more diversified gold producer across the Americas. With flagship assets like the Greenstone Project and the soon-to-be fully operational Valentine Mine, Equinox is on track to become Canada’s second-largest gold producer by the time Valentine reaches full production, which is anticipated in late 2025. This merger not only aims to expand the company’s scale but also seeks to transform Equinox into a more resilient, balanced, and opportunity-rich enterprise for the long term.

The merger aims to establish a more diversified gold producer, enhancing scale, cash flow, and financial flexibility to manage debt maturities and pursue growth opportunities. However, such a deal always has its share of issues, and investors should be cautious not to be overly optimistic.

In summary, Equinox Gold’s 1Q25 results reveal a company at a critical juncture. The combination of record production and rising gold prices drove exceptional revenue growth and cash flow, but operational disruptions and higher costs led to a wider net loss. Moving forward, the successful integration of Calibre’s assets, continued ramp-up at Greenstone, and disciplined cost management will be key to turning its strong top-line momentum into sustainable profits and shareholder value.

Furthermore, the indefinite suspension of Los Filos is also a major unexpected event for Equinox Gold, both operationally and strategically. As one of its higher-cost mines, Los Filos added volume but diluted margins. Its closure in April 2025 will likely improve the company’s average cost profile but reduce overall production (Los Filos produced 31,518 ounces in 1Q25).

The larger issue to consider here is the long-term implications: without community agreements, the asset risks becoming stranded, which would lock up a substantial portion of reserves and limit growth opportunities. In the short term, Equinox needs to rely more on its Greenstone, Mesquite, and newly acquired Calibre assets to maintain output. At the same time, rebuilding trust and engagement in Mexico will remain a critical challenge moving forward.

Gold prices have stabilized around $3,322 per ounce after hitting a record high of $3,500.05 on April 22, 2025. Although the market has cooled slightly, the broader trend indicates significant structural changes in global investor behavior.The surge in gold prices reflects more than just a shift toward safety; it indicates a profound erosion of trust in traditional financial and geopolitical anchors. Inflationary pressures remain elevated due to sustained fiscal expansion, supply chain disruptions, and increasing protectionist policies. At the same time, ongoing geopolitical tensions, especially the instability in Eastern Europe and the Middle East, continue to heighten global uncertainty.The outlook for long-term U.S. government bonds is gradually declining. Real interest rates have fallen into negative territory, and there are growing concerns about the increasing federal debt, particularly in light of the recently enacted spending bill and escalating tariff disputes. These issues raise doubts about the future strength of the dollar. On the other hand, the market has been thriving and continues its upward trajectory without pause since the “liberation day” shock. This exuberant market behavior often signals the potential for a significant and prolonged correction, which could ultimately benefit gold as well.Gold, once viewed as anachronistic, is being redefined as a critical strategic asset in a world where fiat currencies are losing their credibility. With limited new mine supply and strong demand from central banks, gold’s structural support appears robust. While short-term corrections are inevitable, the elevated price levels suggest that the revaluation of gold may signal not just a price spike, but a fundamental shift in the monetary landscape.If current macroeconomic and geopolitical trends persist, a sustained price floor above $3,200 could become a lasting aspect of the new economic landscape. This likely scenario is very favorable for Equinox Gold and other gold miners, which have not.

Note: Technical Analysis uses StockCharts as a chart background.

Equinox Gold is forming an ascending triangle pattern, with resistance around $6.75 and support near $6.20. Although an ascending triangle is typically viewed as a bullish chart pattern, it also signal a potential bullish breakout, especially when selling pressure begins to wane. The Relative Strength Index (RSI) is currently at 55 and rising, hinting at a possible retest of the $6.20 support level before either dropping back to lower support or rally again to $6.75 and eventually cross the resistance.It may be wise to sell a portion of your shares when the stock price rises between $6.70 and $6.80. If the stock breaks out, the next support level will be at $7.10, at which point I recommend selling another part of your position. I believe that selling all of your shares is not the best option; therefore, it would be prudent to retain about 30% of your position for the longer term. Make sure to keep an eye on the volume, as it might indicate an upcoming reversal. Utilizing the LIFO (Last In, First Out) method to sell part of your position is crucial, especially if the stock demonstrates a false bullish breakout followed by a quick and prolonged retracement. For further details, please refer to the chart above.

Conversely, increasing your position between $6.22 and $6.10 seems reasonable. If a breakdown occurs, the next support level is $5.80.

Warning: The technical analysis chart should be updated regularly to ensure accuracy.

This article first appeared on GuruFocus.